Naira advances to two-week high

The naira advanced to its highest level in two weeks amid increased inflows for purchases of fixed-income securities.

The currency, according to Bloomberg, rallied for a second day, gaining 0.3 per cent to N157.30 a dollar in Lagos, the strongest on a closing basis since November 8.

The naira has appreciated 3.2 per cent this year, the second-best performing currency tracked by Bloomberg in Africa.

The naira’s appreciation could be traced to tight monetary conditions, improved supply of foreign exchange to the market by oil companies and increased inflows from portfolio investors, the Central Bank of Nigeria (CBN) Governor Lamido Sanusi said November 20 after the regulator apex bank held its benchmark rate at a record-high 12 per cent.

“Sales of foreign exchange by oil companies and offshore portfolio investors had a role, too,” Gregory Kronsten, the Head of Economic and fixed-income research at FBN Capital Ltd. in London, said in an e-mailed note.

Inflation, which accelerated for the first time in four months to 11.7 per cent in October on widespread flooding of farms, is still above the bank’s target of less than 10 per cent.

Nigeria’s 10-year borrowing costs fell to a record low of 12.01 per cent at an auction on Wednesday after the Debt Management Office (DMO) sold N25 billion ($159 million) of the notes due January 2022, the debt office said yesterday. Demand was more than double the supply. The CBN also sold N116.18 billion of Treasury bills Wednesday.